Conclusion, Investment Implications, Strategy
Table 1 below shows that, as of the close on July 20th, 4 of the Asbury 6 constituent metrics have moved to a positive (green) reading. This turns the “A6” Model itself back to Positive as four or more metrics in one direction, either positive or negative, indicate a tactical bias.
Table 1
Chart 1 below highlights the Asbury 6’s signals over the past 12 months
Chart 1
Asbury 6 FAQ
Q: What is The Asbury 6?
A: The Asbury 6 is a combination of six diverse market metrics that we have combined as a tool to look beyond the day-to-day, up-and-down noise of the stock market to determine its actual health — in much the same way as a doctor first checks the patient’s vital signs during an office visit. We view the A6 as a sort of “lie detector test” for the market. It helps us to identify real, sustainable market advances or declines from computer-driven traps for investors — the latter which we believe are often generated by algorithmic trading.
Q: How should I interpret and use the Asbury 6?
A: The “A6” is updated daily in our Research Center and includes data through the previous day’s market close. Four or more metrics in one direction, either Positive (green) or Negative (red), indicate a tactical bias. The dates in each cell indicate when each individual constituent of the A6 turned either positive (green) or negative (red). When all Asbury 6 are positive, market internals are the most conducive to adding risk to portfolios. Each negative reading adds an additional element of risk to participating in current or new investment ideas.
When the market is at a Tactical inflection point, we will often see the Asbury 6 constituents move quickly and erratically back and forth between Positive (green) and Negative (red) readings. We call this phenomenon “blinking”. It indicates temporary investor indecision and is often the precursor to the market’s next sustained directional move.
Q: Why use quantitative models?
A: Because they force us to be disciplined in our investment approach, rather than chasing the most recent near term move. Another key reason is to keep drawdowns (losing periods in our portfolios) small and relatively short. There is no perfect model that will catch every trend, simply because no one can see the future. But we are convinced that a good disciplined, data-driven approach can allow investors to invest in the stock market, and capture most if not all of its gains over time — with just a fraction of the risk. And that’s what our Tactical models, which include the Correction Protection Model (CPM), are designed to do.